Code Red at Evergrande đ
Ola raises a pot, WhatsApp's crypto push, and regulating algo trading.
Market summary: đ
India continued to push upward, facing resistance but adding a tiny bit on Thursday. US again turned around sharply flogging tech, giving up most gains made earlier in the week.
US:
S&P 500 -Â down 0.72%
Nasdaq - down 1.49%
India:
Nifty 50 - up 0.27%
Sensex - up 0.27%
Whatâs brewing hot â
1ď¸âŁ Here we go again â Amazon got a slap-in-face $1.3 billion fine from Italyâs antitrust police, for asking small merchants to use its own logistics services in exchange for âmore visibility and metricsâ â which regulators say amounts to abuse of power in Europe. đ¤ˇââď¸ Thatâs probably one of the largest fines levied in Europe on AMZN, but still $1.3B against a ~$400B revenue line? Move on.
2ď¸âŁ COVID drives payments boom â RazorPay gave Moneycontrol a sneak-peek into how post-COVID digitization is driving its business. For 2021, the platform will process close to $60 billion in total volumes â beating its own estimates by 20%! Revenues grew 250% YoY, and the business is targeting $90 billion in volumes for next year. Fyi, Stripe processes $350B a year, and PayPalâs Braintree probably does $100B+⌠long road ahead, but quite a ride for RP so far, that too in an emerging market. đ
Evergrande is looking like the Titanic â°ď¸
What happened â the financial world is once again on the edge of its seat after Evergrande, the Chinese real-estate firm on the verge of a collapse, ended up missing a major debt payment, as of today standing in default.
If youâre lost on how we got here, hereâs a quick refresher.
Evergrande was due to pay ~$83 million in payments (on $1.2 billion in international bonds) couple days ago. They missed an earlier deadline, then got a 30 day extension, and that has passed too. Lenders havenât heard a word from the team. Ratings agency Fitch promptly slapped a default tag.
Chain reaction â whatâs worse? a non-payment in these loans could trigger whatâs called a âcross defaultâ â basically a clause that says if Evergrande doesnât pay a certain loan, it has defaulted ALL of its other loans too.Â
Thatâs about $19 billion in international loans at risk right now. China, typically steps in to avoid corporate blowups on its land, but so far has been mum about this fiasco.
Big picture â in total, a $300 billion loan book at risk here â a ticking time bomb that could decimate Chinaâs real estate market, monetary system, sending global shockwaves far far out.
Whatsapp launches crypto payments đ˛
Whatâs poppinâ â last week, Facebookâs paymentâs boss David Marcus announced his resignation, but that ainât weighing things at Zuckâs shop. Whatsapp will start rolling out USDP (stable-coin) backed peer-to-peer payments in the US this week.
The wallet built on programmable Pax Dollar ($USDP), a stable-coin tracking the USD. Folks can just enter their credit card info or bank account, and send out $$ while texting on the app. No âbuyingâ and holding crypto, no other complicated shenanigans.
FB plans on bundling the Novi-wallet tightly across all its products â useful for shopping, splitting bills, creator payments, gaming⌠over time.
For Indians spoilt by the comforts of UPI, it may not seem much, but so far the aging payment rails in the US, 2-3 days it takes to settle transactions, and broad dependency of merchants, small businesses, on sandwich of apps like Venmo, Cash, Zelle â a smoother alternative integrated into social media could be game changing.
Big picture â $2 billion+ Whatsapp users worldwide. FB could instantly scale to hundreds of billions in volumes, diversifying away from an ad-heavy biz.
Delhivery made a quick acquisition đŞ
What happened â the logistics-services provider acquired Transition Robotics, a maker of unmanned drones and aerial monitoring systems.Â
The Santa Cruz, California based startup is designing a flagship drone product called Jumpship, useful for surveying large swaths of lands, real estate assets, large facilities and such. Products arenât commercial yet, but Transition runs a shop thatâs pretty solid on UAV tech and design skills.
Weâre guessing Delhivery is buying them for the tech, to strengthen its own drone-delivery ambitions currently in R&D. And also, a good âpossibilityâ to pitch to potential investors going into the IPO.Â
Meanwhile Ola secured its bag, âď¸
Camp-Bhavish got 2 checks this week. First, Edelweiss and a few others wired $139 million to the ride-hailing business, valuing it at $7.3 billion. Ride-hailing demand still trails 2019 levels, but investors are probably sniffing an IPO on the horizon to offer a sweet exit event.
Then, Temasek, the Singapore governmentâs investment arm, smitten by Olaâs booking-stats for the Electric Bike, wrote a $52.7 million separate check for a piece of the Ola Electric business.
Set for $$ for a couple months here. đ¤
Closing out â SEBI looking at Algo Trading đľď¸ââď¸
SEBI is a bit nervous about retail investors writing and copying code, and possibly manipulating markets with algorithmic trading, or worse, themselves falling prey to scams and opaque strategies.
So a framework to regulate algo trading is being actively considered.Â
SEBI had set up a working group to research the nuances of the game, which submitted its findings in a consultation paper. Ideas are now being heard openly from the public for things it may have missed. Link to the report.Â
Bottomline â multiple startups and tools coming up in this space lately. Robust framework defining the limits will leave the ground fertile for innovation.
What else are we Snackinâ đżđťÂ
âď¸ Travel gotta wait â DGCA extended the suspension of international flights to and from India, till January 30th. Omicron ate your vacay.Â
đ¸ More funders â Twilio, the communications API company, launched a $50 million fund to invest in startups built using its technology platforms.Â
đ§ Old feed coming back â Instagramâs Adam Mosseri was grilled by the US congress. Among several promises, he said Insta is thinking of reverting to a chronological feed.
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